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Protecting your Super | contributions in inactive accounts

— 5 min read

Early in 2019, Parliament passed legislation that may impact the insurance of people with multiple Super accounts.

The law known as ‘Protecting your Super” was introduced to ensure that people, particularly those with either low balances or inactive superannuation accounts, don’t have their Super balances unnecessarily eroded by insurance premiums and fees.

Changes to insurance contributions in inactive superannuation accounts

One of the measures taken is the automatic cancellation of default insurances within inactive Super accounts. Super accounts are deemed inactive low-balance accounts if:

  • No money has been received by the fund within the last 16 months,
  • The superannuation account has less than $6,000,
  • You have not met a condition of release,
  • The account is not a defined benefit account, or
  • The account is not held in a Self-Managed Super Fund (SMSF) or small Australian Prudential Regulation Authority (APRA) fund.

From 1 July 2019, the Australian Tax Office (ATO) has the power to consolidate these inactive accounts on behalf of individuals and superannuation providers are to cancel any insurances held unless the policy holder requests to keep the cover in force.

Understanding the process and impact of the changes

Superannuation providers are gradually contacting the policy holders that are affected by the change. As an individual, you are encouraged to use this as an opportunity to review your insurance portfolio to ensure you and your family are adequately covered and to make sure you are not losing valuable cover that you may or may not be able to get again. In fact, by not reviewing your insurances during this process, you are at risk of losing default insurances that you may still want or may eventually need.

Common examples of when a superannuation may become inactive could be an extended period of maternity leave or a change of job and a new default superannuation account is opened by the new employer.

An account will not be classified as inactive if any of the following have occurred in the last 16 months:

  • You have changed your investment options,
  • You have made changes to your insurance cover, or
  • You have made or amended a binding beneficiary nomination.

If you would like to keep the default insurances within an inactive fund, there are several ways to do so:

  • Advise the fund that you want to keep the cover, or
  • Make a contribution to the fund or rollover another fund.

To avoid any unintended consequences, it is important that you remain up-to-date and that you seek professional guidance to ensure you have the appropriate measures in place.

If you would like to speak to someone in our team of professionals please make an enquiry here.

Referral sources: https://www.investmentmagazine.com.au/2019/03/inactive-accounts-and-duplicate-insurance-the-latest-super-reforms-explained/

Disclaimer: * The information contained in this article is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.


Tom Rogers

B. Comm (FinPlan)


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Tom joined DPM in 2016 and has more than 8 years industry experience. He establishes close relationships with his clients and provides holistic insurance advice to ensure both themselves and their families have financial peace of mind.